The case of Greenhills Securities Pty Ltd v Loire Consultants Pty Ltd [2015] NSWSC 13 is yet another case which should warn creditors that statutory demands should only be used when there is no dispute as to the debt and that the debt needs to be clearly identified.

In this matter, three statutory demands were issued by two parties claiming debts owed by Greenhills.

Prior to addressing the substantive application, the Court considered was whether a single application could be made in respect of multiple demands. The Court held that “where the demands have a common underlying factual basis, it may be more convenient to deal with the demands together.”

The substantive issue was whether there was a genuine dispute or a defect with respect to each of the demands.

The parties agreed to set aside the first demand by consent.

In relation to the second demand Greenhills’ evidence was that there was a dispute as to whether the amount claimed was disbursed in accordance with directions given by the director of the creditor company. The Court was of the opinion that there was a genuine dispute and agreed to set the second demand aside.

In relation to the third demand – Greenhills’ submitted that the demand was defective because the demand was so confusing that it was not possible to tell from the demand the nature of the debt that is allegedly owing. The Court held that the demand was defective in a way which caused “substantial injustice”. While the demand seemed to identify the debt as an amount that was paid to Greenhills, the demand was confusing in that it did not properly assert who made the advance and this uncertainty was not consistent with the statutory demand procedure. ”The procedure is only appropriate where a creditor is in a position to assert clearly the existence of a debt and its essential characteristics.”

All three statutory demands were set aside and the respondents were ordered to pay Greenhills’ costs of the proceedings.

For more information please contact Jonathan Hidayat.